ORAL ARGUMENT NOT YET SCHEDULED

USCA Case #18-5214 Document #1745319 Filed: 08/13/2018 Page 1 of 12

IN THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 18-5214

UNITED STATES OF AMERICA,

PLAINTIFF-APPELLANT,

V.

AT&T INC.; DIRECTV GROUP HOLDINGS, LLC;

AND TIME WARNER INC.,

DEFENDANTS-APPELLEES.

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
NO. 1:17-CV-2511 (HON. RICHARD J. LEON)

BRIEF OF FEDERAL COMMUNICATIONS COMMISSION

AS AMICUS CURIAE IN SUPPORT OF NEITHER PARTY

THOMAS M. JOHNSON, JR.

GENERAL COUNSEL

DAVID M. GOSSETT
DEPUTY GENERAL COUNSEL

RICHARD K. WELCH
DEPUTY ASSOCIATE GENERAL COUNSEL

JAMES M. CARR
COUNSEL

FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554
(202) 418-1740
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TABLE OF CONTENTS

Table of Authorities.......................................................................................... ii 

Interest of the Federal Communications Commission ......................................1 

Argument ...........................................................................................................1 

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TABLE OF AUTHORITIES

CASES 
Mobilfone of Ne. Pa., Inc. v. FCC, 682 F.2d 269
(D.C. Cir. 1982) .............................................................................................4
United States v. FCC, 652 F.2d 72 (D.C. Cir. 1980) ........................................5

ADMINISTRATIVE MATERIALS 
* Amendment of Section 1.17 of the Commission’s
Rules Concerning Truthful Statements to the
Commission, 18 FCC Rcd 4016 (2003) ....................................................3, 4
* Applications of Comcast Corp., 26 FCC Rcd 4238
(2011) ........................................................................................................5, 6

STATUTES 
15 U.S.C. § 18 ...................................................................................................4
47 U.S.C. § 310(d).............................................................................................2

REGULATIONS 
* 47 C.F.R. § 1.17(a)(1) .......................................................................................3
* 47 C.F.R. § 1.17(a)(2) .......................................................................................3

* Cases and other authorities principally relied upon are marked with
asterisks.

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INTEREST OF THE FEDERAL COMMUNICATIONS COMMISSION

Pursuant to Rule 29(a)(2) of the Federal Rules of Appellate Procedure,

the Federal Communications Commission respectfully submits this brief as

amicus curiae in support of neither party. In issuing its ruling in this case, the

district court weighed the relevance of certain documents that had been

submitted by AT&T and DirecTV in previous FCC proceedings in which the

Commission reviewed license transfers associated with proposed mergers.

While the Commission takes no position on the relevance of any specific

document in this case or the ultimate outcome of this appeal, it is concerned

that the district court’s opinion could be read to misconstrue the nature of

FCC adjudicatory proceedings in two key respects that diminish the

evidentiary value of documents submitted to the Commission. The FCC

therefore respectfully submits this brief to protect its institutional interest in a

proper understanding of its rules and the integrity of its own proceedings.

ARGUMENT

In seeking to block the merger of AT&T and Time Warner under the

Clayton Act, the Department of Justice sought to introduce into evidence

documents that AT&T and DirecTV previously submitted to the Commission

in connection with prior proposed mergers—in which the Commission plays

a role in evaluating license transfers between two companies to determine

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whether such transfers are in the public interest. See 47 U.S.C. § 310(d).

The United States claims that such documents support its position in this

litigation that “the economics of bargaining applies to affiliate fee

negotiations and predicts that a vertical merger like AT&T-Time Warner

results in higher fees.” U.S. Br. 42. The district court, however, held that the

documents were of limited evidentiary value. See JA __-__ (Op. 79-85).

While the Commission takes no position on the relevance of any

document in this case, it is concerned that two of the rationales supplied by

the district court for discounting the probative value of submissions made to

the FCC could reflect a misunderstanding of Commission procedures. The

Commission therefore respectfully submits this brief to aid the Court in

understanding how Commission procedures could bear on the weight to

accord to documents that the United States has introduced in this matter.

First, the district court acknowledged that in several filings with the

FCC in previous proceedings, AT&T and DirecTV had made statements that

could be “somewhat probative” of the increased-leverage bargaining theory

that the United States urged the court to apply in this case. JA__-__ (Op. 80-

81). The district court reasoned, however, that because AT&T and DirecTV

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The Commission did not review the Time Warner-AT&T transaction, and
therefore takes no position on whether the proposed merger should proceed or
the ultimate outcome of this appeal.

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“acted as competitors to (or customers of) distributors whose competitive

positions would be affected by FCC review,” the court was, “[f]or that reason

alone, . . . hesitant to assign any significant evidentiary value to [AT&T’s and

DirecTV’s] prior regulatory filings.” JA __-__ (Op. 81-82). The district

court’s apparent hesitancy on this point is misplaced. To the contrary, the

Commission’s rules require all regulated parties—whether applicants seeking

to transfer licenses in connection with a proposed merger or competitors who

oppose the merger—to abide by the same standard of truthfulness in

adjudicatory proceedings.

The FCC’s rules provide that, “[i]n any investigatory or adjudicatory

matter within the Commission’s jurisdiction, . . . no person subject to this rule

shall,” in any written submission, either intentionally or without reasonable

basis “provide material factual information that is incorrect or omit material

information that is necessary to prevent any material factual statement that is

made from being incorrect or misleading.” 47 C.F.R. § 1.17(a)(1), (2). This

duty to be truthful and accurate “extend[s] to all regulatees and not just to

applicants.” Amendment of Section 1.17 of the Commission’s Rules

Concerning Truthful Statements to the Commission, 18 FCC Rcd 4016, 4017

¶ 4 (2003). The Commission takes these obligations seriously, as evidenced

by the fact that its rule prohibits not only intentional misrepresentations, but

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also inaccurate statements submitted due to negligence. See id. at 4020-21

¶ 10. AT&T and DirecTV were subject to this obligation when they

submitted comments in earlier FCC merger proceedings. Thus, there was no

reason for the district court to treat those comments as less credible simply

because AT&T and DirecTV were “competitors” of the merger applicants in

those proceedings (rather than the applicants themselves).

Second, the district court suggested, through citation to the

Commission’s prior review of license transfers connected to the Comcast-

NBCU merger, that the prior FCC filings by AT&T and DirecTV were less

probative here because of the “differences” between the “FCC’s ‘public

interest’ review” and the Government’s “burden for ‘block[ing] a transaction’

under Section 7” of the Clayton Act, 15 U.S.C. § 18. JA__ (Op. 83). While

it is correct that the Commission’s “public interest” review is broader in

certain respects than traditional antitrust analysis, the Commission has

historically included competition analysis as one component of its public

interest review and has looked to the Antitrust Division’s merger guidelines

for guidance when doing so. See, e.g., Mobilfone of Ne. Pa., Inc. v. FCC, 682

F.2d 269, 272 (D.C. Cir. 1982) (“It has long been settled that antitrust

considerations are material to the public interest as defined by section 309 [of

the Communications Act].”); United States v. FCC, 652 F.2d 72, 88 (D.C.

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Cir. 1980) (when the FCC evaluates a proposed transaction under the public

interest standard, it “seriously considers the antitrust consequences of a

proposal and weighs those consequences with other public interest factors”);

Applications of Comcast Corp., 26 FCC Rcd 4238, 4248 ¶ 24 (2011)

(Comcast-NBCU Order) (the FCC’s “competitive analysis” of proposed

transactions “forms an important part of the public interest evaluation” and

“is informed by … traditional antitrust principles”). Indeed, before it

approved the license transfers connected to the merger of Comcast and

NBCU, the Commission evaluated the competitive harms that would result

from the transaction. See Comcast-NBCU Order, 26 FCC Rcd at 4382-4404

(App. B).

In doing so, the FCC found, among other things, that “vertical

integration of NBCU’s programming and Comcast distribution assets would

improve the bargaining position of the integrated firm when negotiating the

sale of programming to one of Comcast’s video distribution rivals because

some of the rival’s subscribers will shift to Comcast.” Comcast-NBCU

Order, 26 FCC Rcd at 4391 (App. B ¶ 37). The integrated firm would thus

be able “to extract higher prices” from rival video programming distributors

“than pre-transaction NBCU was able to” negotiate. Ibid. To prevent such

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anticompetitive conduct, the FCC imposed certain conditions on the

Comcast-NBCU transaction. Id. at 4259-62 ¶¶ 49-59.

In determining that the Comcast-NBCU merger would increase the

bargaining leverage of the merged firm in programming negotiations, the

FCC applied the same “[s]tandard bargaining theory” that formed the basis

for the government’s suit to block the AT&T-Time Warner merger. See

Comcast-NBCU Order, 26 FCC Rcd at 4391 (App. B ¶ 37). Applying “a

Nash bargaining model,” the Commission concluded that the proposed

Comcast-NBCU merger would increase the merged firm’s bargaining

leverage “due to the expected gain in subscribers to Comcast cable if

programming is withheld from a rival” video programming distributor. Id. at

4393 (App. B ¶ 39). DirecTV made the same point in a filing with the FCC

concerning the Comcast-NBCU transaction, arguing that the merger “would

enable Comcast to raise the prices paid by its [distributor] rivals for NBCU

programming.” JA__ (PX0441-005). AT&T made this point more broadly

in another FCC proceeding, arguing that cable operators with affiliated

programming “attempt to use their control over such programming to try to

artificially limit competition in downstream video distribution markets.”

JA__ (PX-442-004).

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In short, given that the Commission analyzes competition as one

component of its public interest review of license transfers, the district court

erred in suggesting that differences between these two standards made

documents submitted to the Commission less probative of statements

contained therein that relate to market analysis.

Respectfully submitted,

Thomas M. Johnson, Jr.

General Counsel

David M. Gossett
Deputy General Counsel

Richard K. Welch
Deputy Associate General Counsel

/s/ James M. Carr

James M. Carr
Counsel

Federal Communications
Commission
Washington, D.C. 20554
(202) 418-1740
August 13, 2018

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s/ James M. Carr
James M. Carr
Counsel
Federal Communications
Commission
Washington, D.C. 20554
(202) 418-1740
USCA Case #18-5214 Document #1745319 Filed: 08/13/2018 Page 12 of 12
 

CERTIFICATE OF FILING AND SERVICE

I, James M. Carr, hereby certify that on August , , I filed the foregoing

Brief of Federal Communications Commission as Amicus Curiae in Support of

Neither Party with the Clerk of the Court for the United States Court of Appeals for

the District of Columbia Circuit using the electronic CM/ECF system. Participants

in the case who are registered CM/ECF users will be served by the CM/ECF system.

s/ James M. Carr
James M. Carr
Counsel